Rochester city manager wants department budgets at zero increase

ROCHESTER — To prepare for higher than anticipated expenses next year, the city manager is asking department heads to propose budgets that have zero-percent increases over the current fiscal year.

Earlier this week, Police Chief Mike Allen said a zero-increase budget would mean having to eliminate several police officers.

According to City Manager Daniel Fitzpatrick, the increases in retirement and health insurance costs next year will be unusually high.

Next fiscal year, Rochester will have to pay about $387,000 more into the New Hampshire Retirement System, which is an increase of more than 20 percent. Finance Director and Deputy City Manager Blaine Cox said retirement costs, set by the Retirement System board of trustees, are going up about 22 percent for municipal employees, 27 percent for police officers, and 21 percent for Fire Department members.

Also, the city’s health insurance costs may go up by as much as 14 percent. Cox said 14 percent is the guaranteed maximum rate released by the Health Trust, a public health insurance pool of the Local Government Center.

The actual rate increase for health insurance won’t be known until about April or May, said Cox. If rates go up by 14 percent, the city would have to pay roughly $319,000 more toward health insurance next year.

On Wednesday, Cox said while he was expecting increases in health insurance and retirement costs, he was somewhat surprised by the magnitude of these increases.

As city officials begin the process of preparing the budget for next year, Fitzpatrick said he recently met with all city department heads and asked that they submit proposed budgets that have zero-percent increases.

“I probably gave them expectations that they could not meet, but that’s what I’m supposed to do. I’m supposed to make it challenging for them,” Fitzpatrick said Wednesday. “Our goals are always to keep the expenses down as much as possible and retain current services.”

After each department submits its proposed budget for next year, Fitzpatrick will review the budgets with his financial team. Then, he will meet with department heads individually and go over the various scenarios for funding, and make any necessary adjustments.

The City Council will give final approval of the budget around June.

When asked about the possibility of personnel being laid off because of the tight budget, Fitzpatrick said, “We have to look at every scenario.”

While Fitzpatrick said it’s too early to tell whether layoffs will take place as a result, he did note personnel costs make up the majority of the budget.

“That’s where the costs are,” he said.

Besides the increasing retirement and health insurance costs, another big expenditure for next year is personnel costs related to collective bargaining agreements approved last year. But Fitzpatrick said expenditures having to do with labor union contracts have been budgeted for, and “that’s within manageable limits.”

“What we couldn’t plan for is the retirement bill and the medical bill,” he said.